AMSTERDAM (Reuters) – The Dutch decision to take control of chipmaker Nexperia in September was due to fears that the company's former CEO was already dismantling the company's European operations and moving production to China, four sources in The Hague familiar with the government's thinking said on Monday.
A months-long standoff between China and the Netherlands over Nexperia has prompted automakers in Europe, the US and Japan to warn of possible production problems due to chip shortages. Although the chips that Nexperia makes are very basic, they are used in large numbers in the electronic systems of cars.
The sources in The Hague said former Nexperia CEO Zhang Xuezheng, who is also the founder of Nexperia's Chinese parent company Wingtech, planned to lay off 40% of staff in Europe and close a research and development facility in Munich.
Before Zhang was suspended as CEO by a Dutch court on October 1, he had already transferred secrets from the company's factory in Manchester, Britain, to a Wingtech factory in China, including chip designs and machine settings, they said. Physical equipment from the company's production plant in Hamburg would be included next, she added.
Zhang could not immediately be reached for comment.
The Dutch government took control of Nexperia on September 30, citing management errors. On October 4, China's Ministry of Commerce blocked the export of the company's products from China. Although most of Nexperia's chips are produced in Europe, about 70% are packaged in China before distribution.
The company's Chinese arm has taken steps toward independence and has resumed sales of products to domestic Chinese customers.
The sources said the Dutch government believes it can negotiate a resolution with China that would restore the company to a unified Dutch-Chinese structure.
(Reporting by Toby Sterling, Editing by Rosalba O'Brien)
